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CTL Strategies ranked by Asia Law Profiles as a leading tax law firm in the Maldives

The Asia Law Profiles have ranked CTL Strategies as the leading law firm in the areas of taxation in the Maldives. It has also recognized us as the highly recommended firm in the areas of litigation and disputes.

The team at CTL Strategies has been praised by their clients as “dedicated and professional” in representing them in foreign investment and, cross-border taxation matters. The firm has a notably stellar reputation amongst local and multinational businesses in the Maldives, for managing and handling tax controversies and corporate litigation.

Recent News

MED publishes Regulation on Dissolution Procedures of Non-Compliant Companies

On 18 June 2019, the “Regulation on Dissolution Procedures for Companies to be Dissolved by Decision of the Registrar of Companies” was published in the Government Gazette.

The Regulation, which was formulated pursuant to the Fourth Amendment to the Companies Act, which commenced on 20 December 2018, specifies procedures to be followed by the Registrar with respect to the dissolution of Companies which fall within the ambit of Section 75(b)(1) of the Companies Act.

Section 2(a) of the Regulation indicates that the Registrar has the power to dissolve companies that fall within the circumstances described under Section 75(b)(2) of the Act which are, failing to pay their annual fee by the end of the month or May, or companies which do not conduct any transactions for a period of 1 (one) year following the date of incorporation, or companies which do not conduct any commercial transactions for a 2 (two) year period, or where a Managing Director of a company is fined pursuant to Section 69(a) (failure to submit annual report and related documents within 15 days of the Annual General Meeting), the Registrar may proceed with the process of the liquidation of the non-compliant company if the Managing Director fails to submit the required documents even if the fine amount has been settled. Furthermore, Section 2(b) stipulates that the fine and documents indicated in Section 2(a)(4) must be submitted by 30 June.

The Regulation also states that a general announcement will be made in the government gazette for any claims or debts pertaining to companies to be dissolved under Section 2(a)(4) of the Regulation. Following the announcement, any party that has a claim against the company will have a 14 (fourteen) day period to notify the Registrar of such claim. If the Registrar of Companies is notified of any such claim, the Registrar shall file for dissolution with the relevant court of law, as per Section 7 of the Regulation.

Companies which are to be dissolved, as per this Regulation, may notify the Registrar of Companies of their intent to re-commence business operations within the 14 (fourteen) day period stipulated in Section 3 of the Regulation. However, such companies are required to fulfil all outstanding obligations within the 14 (fourteen) day period as well.

Section 6 of the Regulation also permits any company, subject to dissolution under Section 2(a), and after the expiry of the 14 (fourteen) day period specified in Section 3, to apply for fine relief with respect to any fees or fines owed to the state.

Tribunal Makes a Landmark Decision on WHT on Interconnection Charges and Computer Software Payments

On 26 April 2019, the Tax Appeal Tribunal has set a landmark precedent on the application of Section 6 on Interconnection Charges and similar types of payments, and payments made for the use of certain types of Computer Software utilized in the Telecommunications Industry. The decision was made unanimously by the Members in favour of the Appellant, Ooreedoo Maldives Private Limited – a multinational telecommunications operator.

The Tribunal held that interconnection charges were payments made towards the use of intangible property and thus would not be subject to WHT under Section 6(a)(1) as the scope of the that Section is limited to payments made for the use of tangible property only. The decision made, with respect to Section 6(a)(1), cited the Tribunal’s decision, Medianet v MIRA, which also held that under Section 6(a)(1), “Rent, royalties and any other such consideration..” that is subject to WHT must be paid for the use of the types of tangible property.

Further, the Tribunal held that MIRA erred in application of the law by imposing WHT on interconnection charges under Section 6(a)(4), – under the heading payment for technical services – as the text in Section 6(a)(4) makes it clear that technical services must be construed to involve human intervention of such services while it is not the case in interconnection services. The usage of the phrase, “any other commission or free not constituting income from employment” makes it clear that the section refers to services rendered with a person’s involvement/intervention.

Another important decision made was with respect to Section 6(a)(3) – payments for the use of computer software – with the Tribunal members asserting that simply having access to adaptation features, or configurations for proper and convenient use of the software cannot be considered as customizing or modifying the software.

The Tribunal ordered the MIRA to refund all additional tax and fines paid by Ooreedoo.

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Changes to Thin Capitalisation Rules

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Disputing a Tax Assessment